Fannie, Freddie heads speak in SF

October 20, 2008 6:26:05 PM PDT
With fears of a full-blown recession right around the corner, the White House now agrees it may be time for a second stimulus package.

The Bush administration had been cool on the idea until Monday. Democrats have pushed for a second stimulus package, but there is still no promise it will include a second round of tax rebate checks.

"The average consumer is having a tough time not spending as much in retail sales and the hope would be that with a targeted stimulus package to the average American, they would actually get out there and start spending and help the economy," Charlie Herman of the ABC News Business Unit said.

Since the economy is projected to be weak for several quarters, Federal Reserve bank Chairman Ben Bernanke agrees that that it is appropriate for Congress to consider a fiscal package.

On Wall Street, a few positive signals sent the market up. There would good reports from companies on their earnings. There is also a sense that some of the money the government has been pumping into the financial system is starting to thaw out the credit markets.

"And eventually I think the fear levels are going to be subsiding," Fannie May CEO Herbert Allison said.

In San Francisco, Allison, the CEO of Freddie Mac and the director of the Federal Housing Finance Agency James Lockhart painted a more optimistic picture of the credit markets during a panel discussion at the Mortgage Bankers Association's annual convention.

"I think there are a lot of fixes on the table now," Lockhart said. "The $700 billion bailout will go a long way to reliquify our financial system."

Late Monday, California Senator Dianne Feinstein said she will draw up a bill to make sure those banks that take a federal lifeline under the bailout plan will not be able to use the taxpayers' money to lobby Congress or the White House.


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